Greece Announces Emergency Bank Holiday

GrexitWith the Greek Economy teetering on the brink of complete collapse the government’s Financial Stability Council (FSC) has convened an emergency meeting in which they have decided to declare Monday an emergency bank holiday in a last ditch effort to stop the countries economy collapsing amid a potential withdrawal of emergency liquidity funding by the European Central Bank (ECB).

An emergency meeting of cabinet ministers is scheduled for later this evening following which the government will make an announcement.

With exit from the Eurozone all but guaranteed desperate citizens and companies are emptying their bank accounts and transferring assets abroad.

This is most certainly a catastrophe for Greece, and it will soon become a catastrophe for the whole of Europe.  The effects will be felt in the UK, which is outside the Eurozone, as well as in economies worldwide.

Currently, both the Greek government and European leaders seem unwilling to budge from their positions and with Greece’s €1.6 billion payment to the IMF due on Tuesday, the same day that their current bailout expires, most have lost all hope of a solution now being found.

The position of the Greek government and European leaders has become closer over recent days but nothing short of a substantial shift by either side will see any kind of deal being arranged in time.

The European Central Bank has so far not announced this afternoon (as previously expected) that it is withdrawing emergency liquidity assistance from the Greek banks however they have announced that they will not be increasing emergency funding to Greek banks – something which, for the countless time in recent weeks, is desperately required.  The ECB is now likely trying to reduce it’s risk, by the very small amount it now can, due to the impending default which is now all but a reality.

Although Greek Finance Minister Yanis Varoufakis has resisted calls to implement capital controls, he is now in the situation where there is no option but to implement capital controls – something which will likely be announced tomorrow during the emergency bank holiday.

Leading economists have said that without emergency ECB funding, Greek banks would collapse within hours of opening due to citizens withdrawing money at an alarming rate – money that the Greek banking system simply doesn’t have.

Some economists have stated that the incumbant Syriza government may not impose capital controls, leading to the complete collapse of the Greek economy which they would then blame the ECB for, which is one of the largest creditors to the government.

This would most certainly be the highest stakes game of political point scoring that the world has seen for a very long time.